Walmart Announces Closure of Four Chicago Stores | Hacker News Reader

Walmart Announces Closure of Four Chicago Stores

corporate.walmart.com

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"We know the community will have questions about why we are closing these locations.

The simplest explanation is that collectively our Chicago stores have not been profitable since we opened the first one nearly 17 years ago – these stores lose tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years. The remaining four Chicago stores continue to face the same business difficulties, but we think this decision gives us the best chance to help keep them open and serving the community."

Anyone have thoughts on what the motivation was to keep operating in the red for 17 years, with losses apparently increasing over time?

Isn't Walmart's whole shtick that they move into an area and operate as a loss leader with the hope that their competition is forced to close?

I guess if you have deep pockets you can try for decades to put the local mom & pop shops out of business?

So it's probably that this has nothing to do with their competition then, and rather some other factor causing the continued massive losses and ultimately their pull-out.

> and their annual losses nearly doubled in just the last five years

Something happened in the last 5yrs which made it untenable.

Tax rebates or hope they would eventually be profitable?

Target in Canada is a great case study on what not to do.

It’s simply wanting to make headway in urban markets enough to justify a large investment. The stores were unprofitable but not so much that they couldn’t be kept open to continue learning.

Go back 15-20 years and Walmart’s attempts to grow into dense urban areas were major news stories. Frightening at the time for fans of indie and small chain retail but almost quaint now that Amazon dominates.

Is anyone more familiar with the locale able to provide more context as to why specifically these stores may not be profitable?

Some of them because of too much competition and the fact that they were shitty stores (the north side ones) and too much competition and the fact that they got shoplifted into oblivion (the south side ones).

A lot of big city walmarts are too small to be profitable at their prices. Also people say shoplifting but walmart hasnt confirmed.

Shoplifting

Based on evidence/reporting? Personal experience? Or something else

We've had shop closures blamed on shoplifting in the past that turned out to be due to something else.

This is absolutely not a shoplifting issue. This site is turning into a dumber version of 4chan.

3 of the 4 closing would be rampant shoplifting.

The one in Lakeview didn’t seem to hit the mark.

Residents preferred nearby Trader Joe’s, Mariano’s, Dom’s, Jewel Osco, and Whole Foods over this Wal-Mart.

The Lakeview one has a lot of local competition. However, that location like the one in River north was a freaking mess. It's great for convience.. however Walmart doesn't do well in a small/medium sided format.

I'm just amazed they aren't closing the thunderdome Walmart that is off of North ave.

I live in Chicago and I really think it's just competition.

Take the 2551 W. Cermak Road location. There's a Costco, Aldi, Target, Marianos, for big name shops, but then there's also at least 11 other smaller local or specialty shops (Betheleham Food Mart, Guzman Grocery, Helens Grocery, etc etc etc).

Walmart just can't complete in big cities. I can find something cheaper and higher quality than Walmart just by walking down the street. Walmart does well in smaller towns where there isn't as much competition, and where they can really push their specialty services. I would never get my eyes examined at a Walmart Eye Center, for instance, since I can find three other places that are closer to me. If you're in a smaller town though those things are super convenient.

There was a sudden rise in competition in the last 5yrs that doubled their losses at 4 different locations?

Yeah, absolutely- in the last five years people have moved to delivery in a way that they didn't before. Walmart offered a delivery service but was late to the game- I can get whole foods delivery directly, and instacart for other things. During covid a lot more people took advantage of these services and got used to it, driving up those loses further.

I live here- instacart even has the smaller grocery stores now. Why would I ever go to walmart, or use walmart for delivery, when there's so many options that are better on quality and price? Not only that but the niche stores are also really nice.

The only time I go to Walmart is when I'm visiting my in laws in Indiana. There are two other grocery stores there we'll go to for most things, but if we need anything beyond simple grocery stores then Walmart is the only option.

The market in Chicago is different though. Look at Target, which is doing pretty well in Chicago. They don't have four locations, they have at least 22 that I've counted. They've ditched the extras (eye care, pharmacy, etc) and focused on having convenient locations with lower overhead.

Your argument would be more persuasive if you talked about wages. Which is likely the thing that sealed the deal given the low margin business Walmart operates, far more than typical retail operations. Here in Canada my nephew is being paid $20/hr at a big box because they are desperate for workers. Obviously (to a much smaller degree) it was also in combination with the significant increase in shoplifting and security risks for shoppers/workers that typically creates, and the pressure on hiring, which the typical violence in American Walmart stores was bad enough as it was.

But the wage growth + consequences of the "summer of love" when people realized there are no consequences for mass low level property theft happened in 2020... Same with wage growth around the same time with COVID so that doesn't sound like the whole story either.

Your personal anecdotes about local competition in the city and stuff about instacart ignores the massive price/supply advangage that Walmart has, and aren't very persuasive. Typically you'd also see those trends in other urban areas... Why are these 4 stores in Chicago unique? And why 5yrs ago? Are you saying small stores you love + mid tier competitors all suddenly started opening in 2018?

Because otherwise I'd agree that delivery (see: amazon) growth was what killed it but the doubling of losses started happening in 2018. Before COVID.

And there's tons of stats about Walmart's delivery business was booming during COVID.

There has to be some more stuff that happened around then, in combination with these multiple factors.

The Kenwood location is really small and was mixing both grocery and other retail. It wasn’t a cheap grocery or a high end one.

There were basically better options around it for everything it sold.

people are going to blame this on inner city crime and while that may be a factor, in general, I have observed, in my lifetime, a degradation of societal trust and increase in blatant shoplifting, even in my smallish city in my red state. I first worked as a cashier at Walmart around 2009, for a couple different stores in the state over the course of a few years. then I moved away, moved back, lots of stuff happened, and I was once again out of a job, so I returned to working at Walmart as a cashier in 2018, at a newer store in my hometown. the older store is in "the bad part of town" that has gotten worse over time—but even at the newer Walmart, in a "safer" part of town, I saw more blatant, brazen, non-petty shoplifting than I ever had seen before.

I'm not talking like, take some merchandise to the restroom, remove the security packaging, leave it in the stall, and walk out with the stuff under your sweatshirt. I'm talking like, just walking out of the store with plural heaping cartfuls of large quantities of food, valued at several hundreds of dollars per cart. and there was nothing we could do about it. I almost got fired for trying to stop a guy from stealing stuff one night, and I really should have been, according to policy, as we got in a fistfight and he almost domed me with a maglite.

obviously, even as a then-employee, I didn't give a single shit about Walmart as a corporation, its bottom line, or anything like that—obviously I knew all about the concept of "shrinkage" at that point. but what actually concerns me is this general degradation of societal trust and cohesion we're experiencing, even here in my hometown of ~76,000 people.

when my mom went to school at the same high school I later attended, kids would leave their hunting rifles and shotguns in gun racks in the back of their pickup trucks in the school parking lot, and nobody gave a shit. the year I was born, someone brought a sawed-off to that high school and held up a classroom. (nobody ended up hurt or killed.) when I was a senior in high school, a kid got a felony for leaving a paintball gun in the (locked) backseat of his sedan from a weekend excursion to the woods, in the parking lot of the high school across town, while all schools in the district, including mine, were put into lockdown for about an hour.

I'm not sure where we went wrong, or even what exactly is happening in general, but it's clear that times used to be better with regards to societal trust and cohesion, both here and just about everywhere, and it only seems like things continue to get worse over time.

re: societal trust

Really feels like we need a massive exercise wherein folks have to repeat back what they heard someone say before responding to it, something they have people do in couples therapy.

In the last few years everyone's filters have gotten to the point where it seems like they really cannot even perceive what others say accurately -- literally substituting words -- and continually reframing arguments to the extent that a good portion of fighting online is over things nobody has said.

I mean heck even in the comments on this article, someone mentioned at the end of another comment that they thought this article was "irrelevant" which given this is ostensibly a tech news site that sounded fair (but also: so what?), and the person arguing back said they were "not our arbiter of acceptable content". Relevant... acceptable. The conceptual rift is massive, leaving the second person arguing against a point which has not been made (and then someone else makes a defense of the misconstrued point and so on and so on).

Are you looking for the socioeconomic or racial makeup of those locales?

I wish there was a breakdown of what are the typical parameters of a retailer (e.g. rent per sq foot, theft, labor costs, sales, distance to distribution center, distance to competition) and what made these locations unique. I see businesses all the time where it seems they have very little foot traffic or a location in a crazy expensive area (most places in Manhattan, for instance), and I wonder how these locations make a profit.

I also find it a bit off that this is posted on HN. If it was SF, the narrative would surely be around rents or breakage (well, theft). The announcement doesn't really say anything specific beyond "failed to make a profit for many years".

A business can only suffer so much loss in theft before it has to throw in the towel. They're a business, not a community food bank, even though a lot of people in those communities see it as just that. There's also just an anti corporate mentality - "stealing from CVS is harmless, they can afford it." Then scream in outrage when CVS says no, we don't want to do that anymore, and leaves.

What is interesting about this? Walmart has like 5000 stores in the country, they open and close some every year.

It's potentially significant if it leaves a food desert in the area i.e. the walmarts pushed out/killed local competition, and then they close down which means there are no remaining stores for groceries etc. Not clear to me whether that would be the case here though.

Ya I have to agree why is this on hacker news? When did this creep of just nothing to do with computers or technology start happening? This is just Walmart closing some stores...

> collectively our Chicago stores have not been profitable since we opened the first one nearly 17 years ago – these stores lose tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years.

Is it not interesting that they ran never-profitable million-dollar losing stores for 17 years, and that the losses doubled in the last 5?

No, I don't think so. That seems like a relatively normal thing for a megacorporation with 10,000 stores worldwide. I'm sure it's interesting to some people - if you live in Chicago, if you're an active Walmart investor, if you're a retail industry analyst, but none of that seems particularly relevant here. Presumably every news story is interesting to someone.

Also corporate PR is not generally very trustworthy, so the only thing you can take at face value here is that they are closing four stores.

These are Walmart Neighborhood Markets.

They were always targeted at attracting the Mariano’s and Whole Food's demographic.

The Kenwood one (walking distance from Barack Obama's house) faced stiff competition from the Hyde Park Whole Foods and other more upscale stores in Kenwood/Hyde Park, nor could it compete downmarket with Family Dollar.

Also, completely irrelevant to HN (just like SF crime stories).

> Also, completely irrelevant to HN

Stop. You are not our arbiter of acceptable content. I'm Christian, but I don't get uptight when something related to porn comes up. I just ignore it and move on.

Hi, Christian!

hey

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